Albanian central bank keeps key rate at record-low of 3.5%.

By bne IntelliNews October 31, 2013

The supervisory board of Albania’s central bank decided on October 30 to keep the base interest rate at the historic low of 3.50% for the third consecutive month after cutting it by 25bps in July, the bank said in a statement on its website.

The rate setters said that low inflationary pressure coming from the financial sector and the real economy justifies maintaining monetary stimulus for the period ahead. The decision is in line with the bank’s objective to meet its mid-term inflation target.

Central bankers consider that the existent weak demand and the negative output gap continue to restrain consumer price growth. In addition, the stability of prices on the global markets and the stable exchange rate has resulted in low pressures from imported inflation. Inflationary expectations remain anchored and in line with price stability.

The central bank expects the local economy to continue growing at low positive rates in the period ahead but still below its potential. Foreign demand will remain the main economic growth driver in the short-term, while in the longer-term the bank anticipates a recovery in consumption and private investment.

In the absence of unexpected shocks on the supply side, annual inflation is expected to fluctuate in the range 0.4% - 3.1% in the next 12 months.

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